While Congress grinds to a halt, the PPACA keeps chugging along:
The Obama administration will soon take over the review of health insurance rates in 10 states where it says state officials do not adequately regulate premiums for insurance sold to individuals or small businesses. Starting Sept. 1, federal and state officials will begin to scrutinize proposed rate increases of more than 10 percent to determine if they are justified. White House officials say their ability to publicize excessive, unreasonable rates will be a major protection for consumers under President Obama’s health care law. At least one state, Iowa, has protested the federal decision and asked administration officials to reconsider.
Several other states acknowledged that they lacked the power under state law to review health insurance rates. Several insurance commissioners tried and failed to get such authority from their state legislatures this year. Seven states — Alabama, Arizona, Idaho, Louisiana, Missouri, Montana and Wyoming — do not have effective rate review programs for either individual or small-group health insurance, so federal officials will do the reviews in both markets, the administration said.In three other states — Iowa, Pennsylvania and Virginia — the federal government will review proposed rate increases for small groups and will allow states to review individual rates.
James J. Donelon, the Louisiana insurance commissioner, said: “I cannot quarrel with the federal finding. We do not have any authority to regulate health insurance rates under Louisiana law. I am a Republican,” Mr. Donelon added. “I believe in competition as the best way to protect consumers from unreasonable rates. But I have no way of knowing whether they are reasonable or unreasonable because companies have not been required to file rate increases with our department.”
He’s well-intentioned, he runs a regulatory agency, has a title, and he “believes” in competition.
All he lacked were the rules, and the rates. Other than that, it was going great.
LittlePig
That’s competition, Southern Style.
Down here we spell it c-o-l-l-u-s-i-o-n.
Martin
Of the 10 states mentioned, only PA and VA have anything resembling competition, and even that’s pretty weak. The other states have one insurer with 75% of the market or more. That’s a common problem in small states where the market is simply too small to overcome the up-front costs of entering. PPACA encourages those states to band together under a common set of policies to create larger, more competitive markets, but they simply aren’t doing that.
JD Rhoades
OMG GUVMNINT TAKEOVER AIEEEEEEEEEEEE!
kay
I like him for saying it. Extra points for using “quarrel”.
It’s amazing that they’re defeating rate regulation in state legislatures. I bet the people that live in those states don’t know it.
Bulworth
10th Amendment! Less government! State’s rights! Laboratories of Democracy!
Brandon
Hey, where did my comment go? I’m definitely miffed that someone decided to delete my grade A snark. More than miffed actually.
LittlePig
Nope, that would take money away from their pals in the health insurance business. That business, of course, should now go the way of buggy salesmen and blacksmiths. But then, if these Republicans were around back then, we’d STILL have a federal subsidy for buggy salesmen and blacksmiths. Corporate welfare is the (modern) Republican way.
Punchy
There seems to be a common theme with a vast majority of those listed states….
The incessarnt HOWLING of “states rights!” and requisite mouth-breathing will be the melted butter in my bowl of delicious political popcorn.
Bulworth
Too busy ending labor unions and abortion rights.
Alex S.
@JD Rhoades:
Northern aggression!
Martin
Oh, and Iowa is likely protesting because they regulate at the county level (yeah, all 99 of them). They’ve exacerbated the problem by taking a market that might be reasonably competitive and splintered it to be almost impossible for anyone to enter. Their reasoning for splintering the market wasn’t unsound – they wanted to ensure that each county received adequate health care services, and that all the hospitals and clinics didn’t get dumped in the cities with the folks out in the weeds having no healthcare – but that’s a system that really only works either by fully decoupling care and insurance, or by going with a state run system. Wellmark has ~80% of the market in Iowa, and the county care requirements make it somewhat expensive to operate there, because the state mandates that there be balance in services, so if you want to open a new hospital in a crowded market, you might need to stick it on this side of the county line (this side of the street) and not the other side, and you might be prevented from opening up a pediatric unit because there’s already one on the other side of the county, and if you get a pediatric case at your hospital, you’re required to transport them across county, possibly to a competitors hospital, rather than your in-provider one. That’s at least part of the reason why rates are a bit out of hand there. There’s some sensibility and some stupidity at play there.
(I have close family knowledge of Iowa’s system. Moreso than most other states.)
Martin
Well, yeah, but you have to weigh your options. Had they banded together, they wouldn’t have HHS climbing up their ass come Sept 1. I’ve got to think that outcome is worse than the alternative.
jl
Life insurance moved from dysfunctional poor regulated messes that blew up periodically from the late eighteenth century over the next 50 years. Eventually a regulatory scheme evolved that made them functioning markets that people could rely upon. The blow ups in life insurance were so dramatic, and so many people lost their life savings suddenly and tragically, that anyone who tried to explain it away made themselves ridiculous to any sane person.
The similar dysfunction of health insurance markets works more slowly, and the costs of dysfunction are less obvious. It’s basically sick people dying off one by one, nothing newsworthy about that. In aggregate, we see some of the effects in the stagnating life expectancies in the U.S. compared to pretty much every other developed high income country in the world (something like 20 or 25 countries). In the meantime, very wealthy and powerful financial interests see the benefit of keeping the system going just a few more years. One could argue that their stock holders demand it, and it is their fiduciary duty to keep the machine falling apart at a slow rate to maximize the net present value of the companies. An economist can whip a model that explains that: something like it is better to kill all the whales, or chop down all the trees to maximize net present value profits. The system will end, but a private interest will find it most profitable to mine that system for revenue while it still exists.
That is the only explanation I find reasonable for health insurance in the U.S., since many health insurance execs have said that the system is falling apart and unsustainable. They know it cannot last forever, and the slow disintegration of the health insurance market will damage health care delivery and population health in the U.S. They see that it needs to be changed. someday somehow. The only catch is that they cannot agree to any alternative system that reduces their profits.
I hope the push for adequate regulation continues.
fasteddie9318
More of the Kenyan Usurper’s efforts to bankrupt the country by fiendishly reducing the long-term deficit! Damn him!
Tom65
“Health care for profit”. I see the problem right there.
Southern Beale
So, this weekend we had to fly to L.A. for a cousin’s funeral, and since our travel was unplanned — my cousin’s passing was very unexpected — we had to pay for an extremely expensive ticket. So imagine my anger to learn that while we were traveling, we were paying $150+ in taxes which, because of Congress’ failure to fund the FAA this weekend, apparently is going straight to the air carrier’s coffers.
So yeah, these “job creators” and Titans of capitalism we’re all supposed to kowtow to decided to collect a “tax” and funnel that river of money straight to themselves. Shocker, I know.
jl
@16 Southern Beale
Sorry to hear about your loss.
But the good news is that your story about the airline tickets is not true, and it did not happen.
See, the long run equilibrium when the airlines do not have to pay the tax is that prices fall. Airlines have rational expectations, and know this is the new equilibrium. A company would lose revenues if everyone reduced ticket price except for them. So they all move to the long run equilibrium solution right away.
So, what you describe did not happen. No worries.
Hey, that kind of reasoning works for conservative unregulated market fundamentalist macroeconomics. What’s to doubt?
Davis X. Machina
@Martin: They may be counting on the whole thing just going away. I don’t think it’s a possibility, but I’ve seen a similar response to each successive educational reform wave.
(Of course, those come every 3-5 years, so you can count on any one particular of them going away. Not to mention that contradict each other, and improve the lives of nobody who isn’t a consultant, so maybe it’s not a perfect analogy.)
NonyNony
@Martin
Worse for who?
For the guys in the state government – who aren’t going to like the feds bigfooting their “states rights” sure.
But for the insurance companies? Honestly they’d rather have the Federal government running it all. They don’t like dealing with a patchwork of laws most of the time – too iffy. They’d rather only have one person they have to bribe rather than 50. Sure if they can get away with NO regulation – as apparently some states have been doing – that’s preferred. Always better to be able to work without any sunlight at all.
But if there must be sunlight they’d prefer consistent rules from a single organization with a single Congress that they can put pressure on. And in their favor it’s always cheaper to maintain compliance with one set of rules rather than 50.
Will
Great article–thanks for the update!
Trollenschlongen
testing
Martin
@NonyNony:
True, they would prefer a single marketplace, but they’re also afraid that the for-profit nationals would simply run the table in that case. All of these state monopolies tend to be the not-for-profit BC/BSs, and they simply aren’t geared to go headlong against the Aetnas. My guess is Wellpoint would simply go around and buy everyone out. Not exactly a desirable outcome.
Idaho/Wyoming/Montana even combined are still a small market, but they have fairly compatible regulations, and they have some pretty decent plans up there, with Idaho probably leading that trio. I’d think states like that where rural care concerns trump all would want to retain some independence and not get sucked into systems that work well in mostly urban NY and CA.
burnspbesq
@Tom65:
““Health care for profit”. I see the problem right there.”
Doesn’t seem to be much of a problem in Switzerland or the Netherlands.
Profit’s not the issue. How profit is earned is the issue. And I’m sure you know that.
Southern Beale
Fox News’ ratings are in a free fall.
All together now: awwwwww….
catclub
So. Beale:
I wish I could be happier about that ratings fall.
Why do I suspect that CNN simply got a Casey Anthony ‘bump’.
Davis X. Machina
@burnspbesq: Thanks to a son who’s off to uni there in a month, I fount out you can price Swiss health insurance online, through a portal, in English (because of the huge number of people speaking English who are in Switzerland for business, NGO, UN and education purposes.)
There is a mandate — I had to get a notarized copy of a letter from my BCBS provider sent to the Vaud cantonal government proving that a.) the student was covered and b.) the coverage met Swiss minimums.
During orientation, anyone without such coverage is being duck-walked to a computer and being made to get it — there’s a half-day in the schedule for it.
Lausanne’s postal code is 1001. 1 SF = ~$1.20
It’s interesting, and worth comparing with what you pay today. Lord knows their care doesn’t differ significantly from ours — same drugs, machines, procedures.
jl
@22 burspbesq
But for Netherlands and Switzerland, the profit on the basic mandatory comprehensive health insurance package is very strictly regulated. They use a public utility model: a very highly regulated and very standardized basic insurance product, and in return for that a very highly regulated profit. Which they attempt to limit to what economists would call ‘economic’ profit, and US private enterprise would recognize as the bare cost of providing the service, that is, no profit at all in terms of U.S. business’ view of the world.
They are much more highly regulated than anything that can happen under U.S. health care reform.
Supplemental health insurance markets in those countries, then, yes, for those, there is more a U.S. style entrepreneurial profit motive operating.
jl
@23 Maybe Boehner let out the news in a marshmallow interview that he did not have enough GOP House votes for his own plan, which he touted last night.
That kind of thing might be sapping their vitality.
Or maybe not enough excitement on Fox News these days. If Matthews lets a House GOPper rave on national TV about crashing the economy in order to force a rewrite of the Constitution, that is exciting TV. Fox had better be able to match it.
Raving about the dark soshulist cryptoMuslin is old news. There is an old saying in show biz: get a new act or get a new audience.
gene108
I assume people in those states are operating under the principle of, “if it makes liberally happy, I’m against. If it makes liberals mad, I’m for it.”
A lot of votes for elected officials are cast based on that line of thinking.
The existing law makes liberals mad, so those folks will support anyone who has supported the existing law. They don’t really care about the consequences.
Kyle
He has no way of determining how much, if any, ‘competition’ there is in health insurance, and he’s well-paid not to look too closely.
There’s private corporations in the market, so there must be ‘competition’ and it must be ‘good’.
Raven (formerly stuckinred)
And for some really good news, the Shrimp Pimp just rolled into Athens with a load of head-on white srimps right out of the water!
Laissez les bons temps rouler!
Yutsano
Also too: most Swiss health insurers are also in the life and home insurance business as well. So they run the basic plan as more or less a loss leader and the supplementals they package like what GEICO does.
artem1s
OT, the Hairpiece has weighed in on the default. In case any of you think that it’s good news for the GOP if they go for broke, remember what a tool this guy was.
http://www.mcclatchydc.com/2011/07/26/118217/donald-trump-recommends-default.html
kay
Oh, come on. These are whole states. Missouri would trade lower health insurance premiums for vengeance on liberals? The whole state?
Insurance regulation is dead-boring and they’re (understandably) not paying careful attention to their corrupt state legislators.
Martin
With an average audience age of 65ish, I think getting a new audience is on a fairly regular cycle for Fox.
Davis X. Machina
@Yutsano: The Swiss health-insurance minimum coverages are here. This was interesting:
Basic health insurance will only pay up to twice the amount the same treatment would cost in Switzerland. This is sufficient for travel within Europe, but in certain overseas areas it is highly recommended to buy additional insurance, especially for travel in the USA, Canada, Australia and Japan.
Sly
@gene108:
That the voters don’t know is far more likely. Most voters don’t pay attention to matters of policy because it requires a depth of technical know-how that you can’t expect most people to possess with respect to a majority of policy issues. Expecting everyone to be even an amateur healthcare economist is expecting too much.
It’s easier to just tune it out and rely on an intuitive (and usually faulty) sense of who seems to be the right choice when it comes to voting someone into office. The cultural component of political ideology (everyone I know who is important to me is conservative/liberal, so I should be conservative/liberal to fit in) doesn’t replace this phenomenon, it just reinforces it by further skewing that intuitive sense toward a particular choice. The psychological connotation of the word “stereotype” was coined to explain this exact kind of behavior; how people form a “picture in their heads” of what seems right or wrong to aid them in making decisions when they don’t (and likely can’t) possess all the facts.
Calouste
@artem1s:
Well, going bankrupt has never hurt Trump the three or four times he did it, so I can see where he’s coming from.
ericblair
jl upstream did the mega-snark version, but I think this is a good counterexample for wingnut tax arguments. Remember all that crap about how if we increase taxes on corporations they’ll just pass it on to the consumer dollar for dollar, and if we cut them they’ll pass it on to us? Here we have an unintentional mega tax cut, and guess what got passed to the consumer: a big ol’ pile of jack shit. I know all you commie libruls are picking your jaws off of the floor with the shock of it all.
gene108
To Sly#36, Kay #33
To clarify, because most people (myself included) can’t be expected to understand the impact of medical insurance regulations in a state or many other pieces of legislation, people tend to go by whatever low information matrix they plug into for information about legislation.
I’ve met plenty of otherwise intelligent conservatives, when confronted with whether to support or oppose something and having limited information, base their decision on how liberals react.
I don’t think this is entirely an inexplicable thing.
We turn to various media outlets to condense legislation into bite sized bits for us to understand.
If Rush Limbaugh says law “A” is great, my gut reaction is to oppose law “A”.
Right-wingers have that sort of distrust with every media out let that isn’t a right-wing media outlet. They’ve been drilled into accepting the line about “liberal media bias” for decades, from most of the MSM.
If a MSM outlet is saying law “A” is bad, they may as a gut reaction decide to support legislatures, who support law “A”. Especially if there’s a tizzy of hand wringing from left-wingers about how bad law “A” will be.
Some of the right-winger’s views about “government being the problem”, “tax hikes kill jobs”, etc. have become matters of faith. They no longer accept that government can produce a leveled playing field for businesses and consumers by preventing monopolies from forming. They assume government hinders business.
So based on their biases about government and their gut reaction to who supports and who opposes a bill, I very well do believe that a fair number of right-wingers automatically assume that if liberals are for it, I should be against it and vice versa.
If you state a law will get government out of regulating health insurance premiums, right-wingers will inherently look at it as a triumph for limited government and free enterprise.
When liberals start making a fuss, it only reinforces their view that the law can’t be all made because the “DFH’s are against it.”
Thomas
A regulator can be a regulator, and a good one, without comprehensive authority to set prices. There’s nothing in the nature of insurance regulation that requires one to have authority to review prices.
Other than that, great post.
Ruckus
gene108
One thing that makes conservatives so hard to convince of anything is that they take everything on faith now. They don’t have to think if limpballs is correct, if he says something it is taken on faith. The only thing that is required is for the speaker to be perceived to be part of the group. You can’t reason with them, they have to question whatever themselves. Take John, he was in the bag for conservatism. He got out by questioning things himself. It’s an addiction. An addiction of faith over reason.